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The Climate Investment Funds (CIFs)
Many governments hold that environmental degradation
and climate change pose international and trans-boundary
risks to human populations, economies, and ecosystems. To
confront these challenges, governments have negotiated
various international agreements to protect the
environment, reduce pollution, conserve natural resources,
and promote sustainable growth. While some observers call
upon industrialized countries to take the lead in addressing
these issues, many recognize that efforts are unlikely to be
sufficient without similar measures being taken in lower-
income countries. However, lower-income countries, which
tend to focus on poverty reduction and economic growth,
may not have the financial resources, technological know-
how, and/or institutional capacity to deploy
environmentally protective measures on their own.
Therefore, international financial assistance, or foreign aid,
has been a principal method for governments to support
actions on global environmental problems in lower-income
countries. Often, this assistance can serve as a cost-effective
strategy for donor countries to provide greater market
access for domestic goods and services abroad and
increased environmental benefits at home.
The United States and other industrialized countries have
committed to providing financial assistance for global
environmental initiatives through a variety of multilateral
agreements, including the Montreal Protocol (1987), the
U.N. Framework Convention on Climate Change (1992),
and the U.N. Convention to Combat Desertification (1994).
International financial assistance takes many forms, from
fiscal transfers to market transactions. It may include
grants, loans, loan guarantees, export credits, insurance
products, and private sector investment. It may be
structured as official bilateral development assistance or as
contributions to multilateral development banks (MDBs)
and other international financial institutions.
In February 2008, Japan, the United Kingdom, and the
United States announced their intention to create a set of
funds at the MDBs to help developing countries bridge the
gap between dirty and clean energy and boost the World
Bank's ability to help developing countries tackle climate
change (Henry Paulson, et al., Financial Bridge from
Dirty to Clean, Financial Times, February 7, 2008). The
World Bank held the first design meeting for the proposed
Climate Investment Funds (CIFs) in March 2008 in Paris,
France. Two subsequent meetings were held in
Washington, DC, and Potsdam, Germany, and on May 23,
2008, representatives from 40 developing and industrialized
countries reached agreement on the funds' design and
duration. (The CIFs were programmed to sunset upon the
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commencement of the Green Climate Fund in the U.N.
Framework Convention on Climate Change [UNFCCC].)
Since 2008, the CIFs have provided 72 developing and
middle-income countries with financial resources to
mitigate and manage the challenges of climate change and
reduce their greenhouse gas emissions. The CIFs are
composed of two separate trust funds-the Clean
Technology Fund (CTF) and the Strategic Climate Fund
(SCF)Ieach with a specific scope, objective, and
governing body. Overall, 14 contributor countries have
pledged $8.1 billion to the funds since September 2008.
The contributions are expected to leverage an additional
$57 billion from other sources (e.g., MDBs, financial
intermediaries, and the private sector).
For a full description of purpose and programs, see the CIFs
website at http://www.climateinvestmentfunds.org/cif/.
The CIFs are implemented through a partnership of the
MDBs and governed by representatives from both the
contributor and recipient countries. The role of governance
for the CTFs is to approve investment plans, programming,
and the allocation of financial resources and to provide
guidance, performance evaluation, and reporting. It is
further tasked with ensuring that the strategic orientation of
the CIFs is guided by the principles of the UNFCCC. The
organizational structure of the CIFs is balanced between
contributor and developing countries. All decisions are
made by consensus. Other international organizations, the
private sector, and civil society representatives are included
as observers. All observer roles are active, allowing them
to take the floor, propose agenda items, and recommend
experts but not to vote. The governance structure of the
CIFs includes a Trust Fund Committee, an MDB
Committee, a Partnership Forum, an Administrative Unit,
and the Trustee (the World Bank).
The United States pledged $2 billion to the CIFs in 2008.
All U.S. funding is subject to annual congressional
appropriations, and payments are made by the Treasury
Department to the World Bank as trustee for the CTFs.
Appropriations have varied widely over the years, largely
reflecting budget trends. Appropriations provided for in
H.R. 2029, the Continuing Appropriations Act, 2016,
enacted on December 18, 2015, as P.L. 114-113, served to
fulfill the United States' 2008 pledge. The Administration
did not request any additional funds for FY2017. See Table
1 for a summary of U.S. contributions.
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